In Final Vote of 2014, Congress Extends Tax Breaks

In the final vote of the 113th Congress, the Senate passed H.R. 5771, the Tax Increase Prevention Act of 2014. The bill, already passed by the House deals with “tax extenders” – the 50+ business and individual tax credits and deductions that expired at the end of 2014. The President has signaled he will sign the bill into law, effectively allowing businesses and individuals to use the credits and deductions for their calendar year 2014 taxes.

The bill would extend for one year nearly all of the expired tax cuts, allowing businesses and individuals to claim them for 2014. Key extensions for business owners:

Increased Sec. 179 Expensing (keeping limits at $500,000/$2,000,000, and including special rules for software purchases)

Research (R&D) tax credit

Employer provided transit/parking benefits

New Markets tax credit (invest in businesses in low income areas)

You can find a more comprehensive list and section-by-section summary here.

Initially, tax analysts and policymakers hoped for a grand compromise that would have made permanent certain tax credits, done away with others, and given remaining credits lengthier extensions to provide more certainty to businesses. That plan faltered when the White House threatened to veto any legislation that did not extend the expanded Earned Income Tax Credit (EITC), a provision not included in the GOP-authored draft. Following this year's work, the incoming Senate Finance Chair Orrin Hatch (R-UT) hopes to address extenders more comprehensively early next year. These credits are slated to expire December 31, 2014.

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